On 25 June 2015, the Brazilian Congress enacted Legislative Decree 146, approving the agreement with the United States (Link) concerning enforcement of the Foreign Account Tax Compliance Act (FATCA), which provides a basis for the exchange of account information from financial institutions between the United States and Brazil.
On 3 July 2015, the Brazilian Secretary of Federal Revenue issued Normative Instruction (NI) No. 1,571/2015 (Link – Portuguese), which requires filing of certain information of financial transactions. The NI enables the collection of relevant information required under the Intergovernmental Agreement (IGA) between Brazil and the U.S. Below we summarize some of the most relevant aspects included in the NI:
e-Financiera filing: This is the new electronic filing which FIs must file with the Federal Revenue Secretary including the relevant reportable information. For this purpose, FIs will have to upload the e-Financeira filing to the mandatory electronic bookkeeping and tax file (“ECD”, for its Portuguese acronym)—which was recently implemented.
Reporting FIs: The e-Financeira filing must be filed by:
- that are authorized to structure and offer complementary retirement benefits plans;
- that are authorized to establish and administer individual retirement funds (“FAPIs”, for its Portuguese acronym); or
- whose core or non-core business includes taking, intermediating or investing financial assets, including so-called “consorcio” transactions, in Brazilian or foreign currency; or the custody of third party’s securities.
- Insurance companies that are authorized to structure and offer insurance plans to individuals.
Additionally, the NI also establishes who is responsible for providing relevant reportable information for the e-Financeira filing, such as fund administrators, custodial institutions, “consorcio” administrators, among others.
Reportable information: FIs are required to report, among other information, the balance of a depositary or investment account on the last business day of a reporting year; name, nationality, address, and tax residency of the accountholder(s). The reportable information increases gradually every year, and beginning on calendar year 2016 it will be extremely detailed and extensive.
Due date: In general, reportable information should be reported semi-annually:
- by the last business day of February, with respect to the period July – December of the preceding calendar year; and
- by the last business day of August, with respect to the period January – June of the current year.
However, in the case of reportable information for the calendar year 2015, the e-Financeira filing may be filed by the last business day of May 2016.
Attention: Exceptionally, for purposes of the IGA, the e-Financeira filing must be made by 15 August 2015 with respect to reportable information corresponding to the period July – December of calendar year 2014.
Penalties: Failure to file the e-Financeira by the due date or otherwise filing incorrect, inexact or incomplete information may result in penalties equal to (a) $5 thousand Brazilian Reais for month or fraction thereof in case of failure to file and (b) an amount of up to 3% of a relevant transaction or operation in case of filing incorrect, inexact or incomplete information. The penalties may be doubled where a notice of assessment is issued by the tax authority.
DIMOF filing: Beginning 1 January 2016, the financial transactions return (DIMOF, for its Portuguese acronym) will no longer be required to be filed.